My SOA - opinions please!

hanfrangipane

Hi there everyone,

I've posted my SOA below and i've checked it against my monthly budget spreadsheet which I keep and it seems to accurately reflect the amount of money I have leftover each month to put towards my OD/CC.

I'll explain here a bit more what is included below as I am aware it looks a bit empty!

The 114 I have put for council tax is in fact all my household bills and includes gas, electricity, council tax, broadband, TV, phone, water, contents insurance. I live with my boyfriend and he pays all bills and I transfer 114 monthly for my share.

I have nothing in for travel/parking as my job requires me to be in a different place every week so it is never a constant expense.

I have listed 'Cash' of £700 as I am owed £450 in expenses from work (due to be paid in a couple of weeks) and my mum owes me 250 which will go straight to paying off OD when she repays me over the next few months.

I have nothing in for car maintenance as I am getting a free service on my car in July and my dad has very kindly said he will pay for the MOT and I don't anticipate too many other costs as the car is only 3 years old. Once I have cleared my debts I will start putting aside cash for this.

I have booked a holiday so the £50 per month is going towards saving for that when the final balance is due (june I think)

The SOA says I have £291 left after debt repayments and at the minute I am being very strict with myself and putting the entire amount towards paying off my OD and CC. The £50 I have put in for entertainment is the only money I am allowing myself for takeaways, clothes, any luxuries like that.

My aim is to have both OD and CC gone by late july/august which I think is acheivable but i'm not sure what order to tackle the debt in.

I have an OD limit of 2000 but am currently only using £1,287. It is interest free up to £1000 so i'm paying interest on £287, but there is a monthly usage fee of £5. Interest is currently £3 a month.
CC is 17.9% so interest on that isn't horrific since the balance is quite low, about £5 a month I think.

I also have a Halifax CC with a £450 limit which is now fully paid off. I rang to cancel it earlier but they persuaded me to keep it but they reduced my rate from 17.9% to 13.95% which I didn't think was too bad.

So really I suppose my question is how is the best way to arrange all this? At the minute I just transfer a set amount to cover food, petrol and entertainment to a basic account and that way I don't touch my current account where bills go from and the surplus building up each month is just gradually reducing my OD on my full current account. My idea is once I get to the point where my OD is interest free then to target the repayments to the CC instead as that is interest bearing.

Then I need a bit of advice on what to do from there. I'll reduce my OD so that reduces my available credit. But should I cancel the credit card (s) and get something a bit better ie 0% on purchases. I want to improve my credit score so I want to keep at least one CC to manage well. I have never missed a payment on anything so have a good history but whenever I look on comparison sites they only ever recommend bad debt credit cards and i'm wondering whether it's because my available credit to salary is too high? I'm on £20k at the minute, will be £22k in september.

I know my situation isn't too bad really compared to some but I really want to get debt free and then stay that way before it gets out of control as I have seen on here can very easily happen. I have paid off £2k over the past year which i'm pleased with. I'm not too bothered about not paying off the car loan early. i'm used to the monthly payments and we (my dad - i pay him, he took out the loan) got a rate of 5% I think and if I remember rightly there were quite high early payment penalties.

Any ideas?

Thanks in advance, just fancied seeing what other people thought and if my plans are sensible

Han






Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1262
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1262
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 333
Management charge (leasehold property).. 0
Council tax............................. 114
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 37
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 125
Clothing................................ 0
Petrol/diesel........................... 55
Road tax................................ 10
Car Insurance........................... 56
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 50
Holiday................................. 50
Emergency fund.......................... 0
Total monthly expenses.................. 840

Assets
Cash.................................... 700
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 5700

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Lloyds CC......................790.......16........18
Graduate Overdraft.............1287......0.........0
Car loan from Dad..............3105......115.......0
Total unsecured debts..........5182......131.......-

Monthly Budget Summary
Total monthly income.................... 1,262
Expenses (including HP & secured debts). 840
Available for debt repayments........... 422
Monthly UNsecured debt repayments....... 131
Amount left after debt repayments....... 291
Personal Balance Sheet Summary
Total assets (things you own)........... 5,700
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,182
Net Assets.............................. 518
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

lambda

I would budget for your car parking as that will be an outgoing that you will struggle to find money for. Just take the average it costs you over a couple of months.

The account with your graduate overdraft, is this the account where you salary goes into and all your standing orders/direct debit payments come out of?

If so, I would set up a very basic current account with another bank and set up a standing order into it, to cover all expenses that are not direct debits/standing orders/debt repayments). So in your case, I'd pay 230 a month + car parking (fuel, groceries and entertainment). That way, you are guaranteed to put that surplus (291) towards your overdraft every month, which at that rate will only take about 5 months to clear.

Once your overdraft is up to 1000 debit, I would just put all that surplus towards paying that credit card off. Once that's done then go back to the overdraft. Alternatively, move the CC to a balance transfer (0%) then pay off the overdraft and just make regular min payments on the CC.

You can easily kill all of this debt in a few months, apart from the loan to your dad. But once your CC and OD is paid off you can pay more a month to your dad.

Does this help?

hanfrangipane

lambda wrote: »

I would budget for your car parking as that will be an outgoing that you will struggle to find money for. Just take the average it costs you over a couple of months.

The account with your graduate overdraft, is this the account where you salary goes into and all your standing orders/direct debit payments come out of?

If so, I would set up a very basic current account with another bank and set up a standing order into it, to cover all expenses that are not direct debits/standing orders/debt repayments). So in your case, I'd pay 230 a month + car parking (fuel, groceries and entertainment). That way, you are guaranteed to put that surplus (291) towards your overdraft every month, which at that rate will only take about 5 months to clear.

Once your overdraft is up to 1000 debit, I would just put all that surplus towards paying that credit card off. Once that's done then go back to the overdraft. Alternatively, move the CC to a balance transfer (0%) then pay off the overdraft and just make regular min payments on the CC.

You can easily kill all of this debt in a few months, apart from the loan to your dad. But once your CC and OD is paid off you can pay more a month to your dad.

Does this help?

Hiya, thanks for replying

I'm already doing what you've suggested re. the separate account. I have a debit card only account that i've had since I got me very fist account aged 11! So I transfer 280 a month which covers everything and that works well, then as soon as my expenses claims come in from work that gets paid into my OD account and any 'profit' I make on my mileage claims is going straight into getting the OD down. Once the debts are gone i'll make sure I put all mileageclaim money into a separate account when it comes in and that can be my car maintenance 'pot'.

I was looking at doing the transfer to a 0% on the CC this morning but i'm worried about applying to just get rejected and then leave a mark on my credit file. If I were to apply should I just apply and see if I can get one or cancel my halifax one first to reduce my available credit and then apply?

Like you said, this lot can easily be dealt with within 4-5 months so i'm just ploughing as much as I can into it so that I can get back to a more normal spending pattern and not feel guilty spending m hard earned money on myself for a little while Just wish i'd been a bit more frugal as a student and not racked up the debts in the first place!

Han

lambda

Regarding the credit card:

Go onto somewhere like moneysupermarket.com. Check out their Credit Card balance transfers and somewhere there will be a tool to "soft" search your credit file. If you do this, it will give you a fairly good idea of how your credit rating stands. It should also tell you which CCs are mostly likely to accept you based on your credit profile. The soft search doesn't affect your credit rating. Don't worry about how much credit you have available; obviously the debt between you and your dad is private, for example.

I did it, I had a fairly good score and then I applied for a CC with 0% balance transfers for 15 months. I was accepted. If you don't try you'll never know!

hanfrangipane

lambda wrote: »

Regarding the credit card:

Go onto somewhere like moneysupermarket.com. Check out their Credit Card balance transfers and somewhere there will be a tool to "soft" search your credit file. If you do this, it will give you a fairly good idea of how your credit rating stands. It should also tell you which CCs are mostly likely to accept you based on your credit profile. The soft search doesn't affect your credit rating. Don't worry about how much credit you have available; obviously the debt between you and your dad is private, for example.

I did it, I had a fairly good score and then I applied for a CC with 0% balance transfers for 15 months. I was accepted. If you don't try you'll never know!

I have just done the moneysupermarket search and my credit score is showing as 'good' but the likelihood of acceptance to all of the balance transfer cards are showing as 'low'.

Might it be because i've moved house within the last year? OTher than that I'm doing everything right to get a good credit score. On electoral roll, all accounts/cards at same address, never missed a payment etc.

Hmm, don't know what to do! Whether to just apply and risk being rejected.

I could call halifax who I have my other empty card with. They've already reduced the % to 13.9% which is quite good and they mentioned that they may be able to increase my credit limit and offer me 0% for 9 months on balance transfers. I would only need to increase my limit by about £250 to be able to cover the transfer from Lloyds so that may be ok. Although 9 months isn't the most competitive, it's easily enough for me to have it paid back in the timescale i'm after.

lambda

Did they give each card a probability score? I'd say if the card had a 60% chance or higher then just go for it. Otherwise, calling Halifax sounds like a good idea. 9 Months 0% is better than nothing! Failing everything, it's not the end of the world really: your CC balance is quite low that the interest won't be massively high anyway. If the overdraft is interest free up to 1000 just get it up to that, and then pay off the CC as fast as you can. Then go back to the overdraft.

Not sure why it's listing the cards as a 'low' probability: moving house obviously doesn't help, of course. How long have you been in employment? Could also be salary. I'm not sure. I wouldn't worry about it. CCs are evil things anyway, so once you get this paid off you may want to consider whether you will need another CC soon or not.

I am in a similar position to you actually. I was a student for 8 long years and I was left with an overdraft of 2800; CC of 1200; Loan of 5000. By then end of 2011 I intend to be debt free. Then no more CCs, loans or overdrafts unless they are totally necessary! Being in debt is no fun because it eats up all of your disposable income; the irony of borrowing is that it leaves you much worse off in the long run. But sometimes it can't be helped (being a student, in our cases). One thing debt is good for is that it teaches you the value of money more! Now that I am earning an honest wage, have bills to pay, etc. I value my money and my debts!

Good luck with it!

hanfrangipane

It didn't give a probability score, just said my likelihood of being accepted to any card on the site was 'low'! So I have no idea what's screwing it up.

I agree, our situations are very similar. I was a student for 3 years, now i'm just over halfway through my professional accountancy qualification. So i'm still on a pretty low salary, as is the norm for training contracts unfortunately! Whilst I was a student my parents weren't in a position to help me out and although I could have lived more frugally I just kept thinking oh i'll have loads of money when i'm earning, i'll just pay it off then! So my student lifestyle, which wasn't even that frivolous to be honest, has meants i've not been able to enjoy my money whilst i've been working as it's all gone towards paying off debts for which I have pretty much nothing to show for!

I've definitely learned the value of money. Once this lot has been paid off my monthly spreadsheet iis showing a savings balance building up from August onwards and I can't wait to see that balance in my accounts being my money that I can put towards getting a mortgage. So it may seem bad now but at least we've learned this early on rather than waiting for the much talked about light bulb moment in our forties when we'd be looking at a period of 7 years or so before we're debt free. Makes me feel very lucky to have learned my lesson so soon!

I agree I don't want credit cards long term but I think I will keep one active for emergencies and maybe use 0% ones for car insurance, holidays for additional protection, things like that, also for work expenses. But definitey not to see it as a substitute for cash!

This is what moneyexpert.com says is good or excellent and I came up as good so god knows why I'm low likelihood for any CC. It doesn't worry me for now as, like you say, I don't really need to transfer as my balance isn't huge. But it does worry me slightly as i'll want a mortgage in the future and I want to know what i'm doing wrong!

Excellent or good

Customers with an 'excellent' or 'good' credit profile normally have all or most of the following characteristics:

• Employed in same job with same employer for a reasonable period (or long-term self employed) I've been employed for just over 18 months with my firm now
• Same address for long period and on the electoral register Only been at our address since last july but on electoral register
• Never missed a payment and not been late with payment in recent years for credit or utilities such as gas; electricity etc Never missed a payment for anything although my boyfriend does all utilities so they're all in his name
• A homeowner (maybe a tenant if in a very desirable residence or location) We're tenants in a good area
• Same bank account for a long period. Been with halifax since I was 11 and stil hold a basic account there, been with lloyds grad account since 2009
• Plenty of credit history e.g. has credit cards good history on both my CCs

lambda

Your salary is not that low - about 18K I think? That's pretty decent for a young graduate salary. I do wish I understood the value of money more when a student, but I just spend cash like there was no tomorrow. Stupid really, as I could be in a much better position now if I'd thought more carefully.

I think (and I may be mistaken) that a mortgage is a different type of credit. It's not completely based on your credit score and the bank has a lot of influence in the decision. Having a savings account with a bank and showing that you are sensible with your money is a good way to get a mortgage. CCs have to calculate the profit that they will make with you being their customer. It could be that there's just no profit in you, so the CCs are just a low acceptance rate - your debt is really not that high, and you earn a reasonable wage, etc. They want people who don't pay their bills fully, have mountains of debt, etc. As that way they can make a killing in interest on them. Totally evil and irresponsible lending, in my opinion.

I have a friend who was declined for a Balance Transfer CC. He earns more than me, always pays off his cards fully and owns a house. Go figure that one out!

hanfrangipane

I'm on 20k currently. I know it's not low, but I know plenty of people who have gone into management grad schemes etc and got paid a lot more. But then I also know plenty who are still unemployed! So i'm not complaining really, and i'll have a fab qualification in 12 months time

Yeah, I see your point with the credit card thing. I suppose I'm just getting frustrated that i'm trying so god damn hard to do the right thing and get myself sorted and then still get rejected! But, like you say, it's a good thing as I don't want much credit in the future. It is totally irresponsible. You see people on here with upwards of 20, 30, 40k of unseured debt on credit cards, overdrafts, loans and I can't even increase my £1k limit, it's madness. But hey ho!

lambda

Well, you don't actually know if you will be rejected. You can still try and apply to one and see.

20k is not to be sniffed at. I know a lot of people who are struggling to find work after uni.

Sepa74

Hi Frangepane, congratulations on getting in control of your debt...

... I'm straying from the Mortgage Free Wannabe board, in case you are wondering!

I did notice one thing on your SOA - the mobile phone charges look quite high. Are you in a contract? Or is most of the amount call charges?

If you are in a contract, shop around and see what other offers are out there, and see if they are cheaper than breaking the contract (bearing in mind you'll have to pay the rest of the contract out).

If you're not on a contract, contact your provider and see if they can offer you something better (you need to threaten to leave to access the really good deals). If that doesn't work, or you don't want to take out a contract, see if there is a cheap SIM only deal available.

Check all your bills so you get an idea of whether you need an agreement which gives you more text, talk or data.

Good luck with everything.